Ladenburg Reports First Quarter 2019 Financial Results

Announces Additional 10 Million Share Stock Repurchase Program

Highlights:

• First quarter 2019 revenues of $335.5 million, up 1.8% compared to
  prior year
• First quarter 2019 net income of $3.4 million and EBITDA, as adjusted,
  of $20.4 million
• Client assets of $172.6 billion at March 31, 2019, including record
  advisory assets under management of $81.1 billion
• Recurring revenue of 77.4% for the trailing 12 months ended March 31,
  2019 in independent advisory and brokerage services segment
• Shareholders’ equity of $254.0 million at March 31, 2019
• Additional 10,000,000 share repurchase plan authorized

MIAMI–(BUSINESS WIRE)–Ladenburg Thalmann Financial Services Inc. (NYSE American: LTS, LTS PrA,
LTSL, LTSF, LTSK) today announced financial results for the three months
ended March 31, 2019.

Richard Lampen, Chairman, President and CEO of Ladenburg, said, “Our
strong operating financial results from 2018 continued into the first
quarter of 2019. This occurred despite the decline in advisory fee
revenue during the quarter due to the lower equity markets conditions
that prevailed in the fourth quarter of 2018. With our advisory assets
increasing 11.5% during the first quarter 2019 to $81.1 billion at March
31, 2019, we are well positioned for the coming periods. First quarter
2019 results were also adversely impacted by the decline in investment
banking revenue from capital markets activity resulting from the
temporary US government shutdown. Our current investment banking
pipeline is solid, and the pick-up in capital markets activity we
experienced in March has continued into the second quarter 2019. We
remain focused on continuing our growth with the support of our $254.0
million of shareholders’ equity and $167.8 million of cash and cash
equivalents and, as appropriate, returning capital to shareholders. We
are pleased to have increased our stock repurchase program, reflecting
the Board’s confidence in Ladenburg’s strong value proposition.”

Adam Malamed, Executive Vice President and Chief Operating officer of
Ladenburg, said: “We made good progress during the first quarter of 2019
on the continued growth of our nationwide network of over 4,400
independent financial advisors, reflecting our successful recruiting of
talented advisors over the past three years. Our advisory assets under
management at March 31, 2019 were a record $81.1 billion, up 10.2% from
$73.6 billion at March 31, 2018 and up 11.5% from $72.8 billion at
December 31, 2018. As we look forward to the remainder of 2019, we will
continue to invest for both near and long-term opportunities to grow our
recurring revenues, while being keenly focused on increasing shared
services and our operational efficiencies and managing expenses. This is
all done to further drive margin and profitability improvements across
the enterprise while making strategic investments to create value for
our employees, financial advisors and shareholders.”

For the Three Months Ended March 31, 2019 (See
Table 1)

First quarter 2019 revenues were $335.5 million, a 1.8% increase from
revenues of $329.4 million in the first quarter of 2018. Commissions
revenue for the first quarter of 2019 increased by 2.2% to $166.9
million from $163.3 million for the comparable period in 2018, primarily
due to an increase in our insurance brokerage segment due to the
acquisition of certain assets of Kestler Financial Group by Highland.
Advisory fee revenue for the three months ended March 31, 2019 decreased
by 0.4% to $113.9 million from $114.4 million for the comparable period
in 2018, primarily due to lower advisory asset balances due to market
declines in the fourth quarter of 2018. Investment banking revenue for
the first quarter of 2019 decreased by 40.4% to $9.8 million from $16.5
million for the comparable period in 2018, due to a decrease in capital
raising revenue, partially offset by an increase in strategic advisory
services revenue. Capital markets activity was negatively impacted
during the first quarter of 2019 by the temporary U.S. government
shutdown. Service fees revenue for the first quarter of 2019 increased
by 29.3% to $32.2 million from $24.9 million for the comparable period,
primarily due to increased revenues from our cash sweep programs.

Net income attributable to the Company for the first quarter of 2019 was
$3.4 million, as compared to net income attributable to the Company of
$5.5 million in the first quarter of 2018, primarily due to a decrease
in profitability at our Ladenburg investment banking segment and
increased overall expenses. Net loss available to common shareholders,
after payment of preferred dividends, was $5.2 million or ($0.04) per
basic and diluted common share for the first quarter of 2019, as
compared to net loss available to common shareholders of $3.0 million or
($0.02) per basic and diluted common share in the comparable 2018
period. The first quarter 2019 results included $1.4 million of income
tax expense, $7.4 million of non-cash charges for depreciation,
amortization and compensation, $0.1 million of amortization of retention
and forgivable loans, $2.8 million of amortization of contract
acquisition costs and $5.0 million of interest expense. The first
quarter 2018 results included $2.2 million of income tax expense, $7.3
million of non-cash charges for depreciation, amortization and
compensation, $0.1 million of amortization of retention and forgivable
loans, $2.2 million of amortization of contract acquisition costs and
$1.9 million of interest expense.

Recurring Revenues

For the trailing twelve months ended March 31, 2019, recurring revenues,
which consist of advisory fees, trailing commissions, cash sweep
revenues and certain other fees, represented approximately 77.4% of
revenues from the Company’s independent advisory and brokerage services
segment.

EBITDA, as adjusted (See Table 2)

EBITDA, as adjusted, for the first quarter of 2019 was $20.4 million, an
increase of 1.1% from $20.2 million in the comparable 2018 period.
Attached hereto as Table 2 is a reconciliation of net income
attributable to the Company as reported (see “Non-GAAP Financial
Measures” below) to EBITDA, as adjusted. The increase in EBITDA, as
adjusted, for the first quarter of 2019 was primarily attributable to
increases in our independent advisory and brokerage services segment as
a result of increased revenue from our cash sweep programs, partially
offset by a decrease in our Ladenburg and insurance brokerage segments.

Client Assets

At March 31, 2019, total client assets under administration were $172.6
billion, a 3.8% increase from $166.2 billion at March 31, 2018. At March
31, 2019, client assets included cash balances of approximately $4.5
billion, including approximately $4.1 billion participating in our cash
sweep programs.

Stock Repurchases

In April 2019, our board of directors authorized the repurchase of up to
an additional 10,000,000 shares of our common stock from time to time on
the open market or in privately negotiated transactions depending on
market conditions. From the inception of its stock repurchase program in
March 2007 through March 31, 2019, the Company has repurchased
83,784,105 shares of its common stock at a total cost of approximately
$201.6 million, including purchases outside its stock repurchase
program, representing an average price per share of $2.41. As of May 6,
2019, the Company has the authority to repurchase an additional
11,732,427 shares under its current repurchase plan.

Non-GAAP Financial Measures

Earnings before interest, taxes, depreciation and amortization, or
EBITDA, as adjusted for acquisition-related expense, amortization of
retention and forgivable loans, amortization of contract acquisition
costs, change in fair value of contingent consideration related to
acquisitions, non-cash compensation expense, financial advisor
recruiting expense and other expense, which includes excise and
franchise tax expense, severance costs and compensation expense that may
be paid in stock, is a key metric the Company uses in evaluating its
financial performance. EBITDA, as adjusted, is considered a non-GAAP
financial measure as defined by Regulation G promulgated by the SEC
under the Securities Act of 1933, as amended. The Company considers
EBITDA, as adjusted, important in evaluating its financial performance
on a consistent basis across various periods. Due to the significance of
non-cash and non-recurring items, EBITDA, as adjusted, enables the
Company’s Board of Directors and management to monitor and evaluate the
business on a consistent basis. The Company uses EBITDA, as adjusted, as
a primary measure, among others, to analyze and evaluate financial and
strategic planning decisions regarding future operating investments and
potential acquisitions. The Company believes that EBITDA, as adjusted,
eliminates items that are not indicative of its core operating
performance, such as amortization of retention and forgivable loans,
amortization of contract acquisition costs and financial advisor
recruiting expenses, or do not involve a cash outlay, such as
stock-related compensation, which is expected to remain a key element in
our long-term incentive compensation program. EBITDA, as adjusted,
should be considered in addition to, rather than as a substitute for,
income (loss) before income taxes, net income (loss) and cash flows
provided by (used in) operating activities.

About Ladenburg

Ladenburg Thalmann Financial Services Inc. (NYSE American: LTS, LTS PrA,
LTSL, LTSF, LTSK) is a publicly-traded diversified financial services
company based in Miami, Florida. Ladenburg’s subsidiaries include
industry-leading independent advisory and brokerage (IAB) firms
Securities America, Triad Advisors, Securities Service Network,
Investacorp, and KMS Financial Services, as well as Premier Trust,
Ladenburg Thalmann Asset Management, Highland Capital Brokerage, a
leading independent life insurance brokerage company and a full-service
annuity processing and marketing company, and Ladenburg Thalmann & Co.
Inc., an investment bank which has been a member of the New York Stock
Exchange for over 135 years. The Company is committed to investing in
the growth of its subsidiaries while respecting and maintaining their
individual business identities, cultures, and leadership. For more
information, please visit www.ladenburg.com.

This press release includes certain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995,
including statements regarding future financial performance, future
growth, growth of our independent advisory and brokerage business,
growth of our investment banking business, future levels of recurring
revenue, future synergies, changes in interest rates, recruitment of
financial advisors, future margins, future investments, future dividends
and future repurchases of common stock. These statements are
based on management’s current expectations or beliefs and are subject to
uncertainty and changes in circumstances. Actual results may vary
materially from those expressed or implied by the statements herein due
to changes in economic, business, competitive and/or regulatory factors,
including the SEC’s proposed rules and interpretations concerning the
standards of conduct for broker dealers and investment advisers when
dealing with retail investors, future cash flows, a change in the
Company’s dividend policy by the Company’s Board of Directors (which has
the ability in its sole discretion to increase, decrease or eliminate
entirely the Company’s dividend at any time) and other risks and
uncertainties affecting the operation of the Company’s business. These
risks, uncertainties and contingencies include those set forth in the
Company’s annual report on Form 10-K for the fiscal year ended December
31, 2018 and other factors detailed from time to time in its other
filings with the Securities and Exchange Commission. The
information set forth herein should be read in light of such risks. Further,
investors should keep in mind that the Company’s quarterly revenue and
profits can fluctuate materially depending on many factors, including
the number, size and timing of completed offerings and other
transactions. Accordingly, the Company’s revenue and profits in
any particular quarter may not be indicative of future results. The
Company is under no obligation to, and expressly disclaims any
obligation to, update or alter its forward-looking statements, whether
as a result of new information, future events, changes in assumptions or
otherwise, except as required by law.

TABLE 2
LADENBURG THALMANN FINANCIAL SERVICES INC.

The following table presents a reconciliation of net income attributable
to the Company as reported to EBITDA, as adjusted for the periods ending
March 31, 2019 and 2018:

Contacts

Emily Claffey / Benjamin Spicehandler
Sard Verbinnen & Co
212-687-8080